Best Term Insurance Plan with High Claim Ratio in India

Term insurance is one of the most important financial protections you can have for your family. Choosing the best term insurance plan with a high claim ratio ensures that your loved ones are financially secure in case of an untimely demise.

In this article, we will cover everything from what term insurance is, why claim ratio matters, top plans in India, and how to choose the best policy.

What is Term Insurance?

Term insurance is a pure life insurance plan that provides financial protection to your family in case of your death during the policy term. It does not have a maturity benefit, which keeps premiums low while offering high coverage.

Key features of term insurance:

Provides financial security for dependents
High sum assured at affordable premiums
Fixed policy term (10–40 years)
Simple and transparent structure

Why Claim Ratio Matters in Term Insurance

The claim ratio is the percentage of claims paid by the insurance company compared to the total claims received.

Importance of High Claim Ratio

High claim ratio indicates trustworthiness of the insurer
Ensures smooth and hassle-free claim settlement
Reflects the company’s financial stability

A company with a claim ratio above 95% is considered highly reliable.

Key Factors to Consider While Choosing a Term Insurance Plan

When selecting a term insurance plan with high claim ratio, consider the following:

1. Sum Assured

Should be enough to cover your family’s financial needs
Consider your income, liabilities, and future expenses

2. Policy Term

Choose a term long enough to cover your dependents until they are financially independent
Typically, 20–40 years

3. Premium Affordability

Compare premiums for the same sum assured across insurers
Opt for online term plans for lower premiums

4. Riders and Add-ons

Accidental death benefit
Critical illness rider
Waiver of premium
Disability cover

5. Claim Settlement Ratio

Prefer insurers with high claim settlement ratio (CSR)
Check IRDAI annual reports for CSR data

6. Flexibility

Some plans offer conversion options to whole life insurance or savings plans
Policy revival and premium payment flexibility

Top Term Insurance Plans with High Claim Ratio in India

Here is a list of popular term insurance plans known for high claim settlement ratio and reliability:

1. LIC e-Term Plan

Claim settlement ratio: 96.48% (IRDAI 2023)
Pure term insurance with affordable premium
Offers accidental death benefit rider

2. HDFC Life Click 2 Protect 3D Plus

CSR: 99%
Covers death, disease, and disability
Multiple plan options and flexible term

3. ICICI Prudential iProtect Smart

CSR: 98%
Covers life, critical illness, and disability
Tax benefits under Section 80C and 10(10D)

4. Max Life Online Term Plan Plus

CSR: 97%
Offers life and accidental death benefits
Easy online purchase and claim process

5. SBI Life eShield

CSR: 97%
Simple online term plan
Affordable premiums with multiple riders

6. Bajaj Allianz Smart Protect Goal

CSR: 98%
Offers multi-risk coverage
Flexible policy term and premium options

Types of Term Insurance Plans

Choosing the right type of term plan is equally important:

1. Level Term Plan

Premium remains fixed throughout the policy term
Sum assured remains constant

2. Increasing Term Plan

Sum assured increases annually, keeping pace with inflation and rising financial needs

3. Decreasing Term Plan

Sum assured decreases over time
Ideal for covering home loans or debts

4. Return of Premium Term Plan

Premiums paid are returned if the policyholder survives the term
Premium is higher but acts as a savings component

Common Riders to Enhance Term Insurance Coverage

Riders help to increase financial protection without buying separate policies:

Accidental Death Benefit Rider – Extra payout if death is accidental
Critical Illness Rider – Covers treatment for major illnesses
Waiver of Premium Rider – Premiums waived if policyholder becomes disabled or critically ill
Disability Income Rider – Provides income in case of permanent disability

How to Calculate the Right Sum Assured

You can use the Income Replacement Method:

Sum Assured = Annual Income × (Number of years to cover) + Liabilities + Children’s Education Cost

Example:

Annual income: ₹10 lakh
20 years coverage
Liabilities (home loan): ₹30 lakh
Children’s education: ₹20 lakh

Total Sum Assured = ₹10 lakh × 20 + ₹30 lakh + ₹20 lakh = ₹2.5 crore

How to Buy Term Insurance Online

Buying online is cheaper and faster:

Visit the insurer’s website or aggregator site
Enter personal details (age, income, dependents)
Choose sum assured and term
Add riders if needed
Pay premium online
Get policy instantly via email

Online plans often have lower premiums than offline plans due to reduced administrative costs.

Tips to Choose the Best Term Insurance Plan with High Claim Ratio

Always check IRDAI’s latest claim settlement report
Opt for a reputed insurer with >95% CSR
Consider online term plans for lower premiums
Include riders to increase coverage
Choose sum assured based on income, debts, and dependents
Review policy terms for exclusions and waiting periods

Common Exclusions in Term Insurance Plans

Be aware of circumstances where claims may be denied:

Suicide within 1 year of policy inception
Death due to participation in hazardous activities
Death due to pre-existing conditions not disclosed
War, riots, or criminal activity-related death

Understanding Claim Settlement Ratio (CSR) — What It Really Means

The Insurance Regulatory and Development Authority of India (IRDAI) defines Claim Settlement Ratio (CSR) as the percentage of claims settled by the insurer out of total claims made in a year.
A high CSR (e.g. 95% and above) generally indicates the insurer is reliable in honoring claims.
When checking CSR, it’s wise to look at a multi‑year average (3–5 years), not just a single year — a consistent record signals stability.
But — CSR doesn’t guarantee a claim will succeed. Factors like incomplete or incorrect disclosures, undisclosed medical history, or documentation errors can lead to rejection even with a high CSR.

Other Important Metrics: Amount Settlement Ratio (ASR) & Persistency Ratio

Some experts recommend also checking Amount Settlement Ratio (ASR) — which measures how much payout (in monetary terms) the insurer released vs. total claim amounts. This helps evaluate how often full payouts are made, not just number of claims.
Persistency Ratio — measures how many policyholders renew their plan year after year. A high persistency ratio suggests customer satisfaction and fewer claim disputes. It’s a good sign of insurer reliability.

Factors That Impact Term Insurance Premiums & Cover

Your premium (and eligibility) depends on several personal factors:

Age and health status: Younger, healthier individuals get lower premiums; smoking, obesity or medical history raises cost.
Lifestyle habits: Smoking or risky behavior may increase premium or limit coverage.
Sum assured and policy term: Higher cover and longer term → higher premium.
Riders / add-ons: Extra benefits (critical illness, accidental death, waiver of premium) increase protection but also raise premiums.

Optional Riders: What They Add — and When They Matter

Adding riders to base term insurance can significantly increase protection:

Critical Illness / Terminal Illness Rider — pays lump-sum on diagnosis of major illnesses (cancer, heart attack, etc.).
Accidental Death / Disability Rider — extra payout if death due to accident or permanent disability; good for risk‑heavy professions.
Waiver of Premium Rider — if policyholder becomes disabled/critically ill and cannot pay premiums, future premium payments are waived but coverage continues.
Return of Premium (ROP) Option — some plans return the sum of all premiums if the policyholder survives the term. Premiums are higher, but it doubles as a forced savings approach.

Buying Term Insurance Online or Offline — Pros & Cons

Advantages of buying online:

Lower premiums (reduced agent commission and overhead)
Instant issuance and easy documentation
Easy comparison of multiple policies via aggregators

Things to check carefully:

Provide accurate, complete information yourself; any incorrect disclosure may cause claim rejection.
Understand medical test requirements and waiting periods (if any)

Common Exclusions & What They Mean for You and Your Family

Even in a policy with high CSR, certain conditions may lead to claim rejection if not disclosed properly:

Suicide within 12 months of policy start (common clause)
Death due to hazardous activities or extreme risk behavior — check fine print
Non-disclosed pre-existing diseases or misreported health conditions
Incorrect or incomplete documentation at the time of claim

So, honesty and clarity at purchase time matters as much as high CSR.

✅ Additional Tips for Choosing the Right Term Insurance Plan

When selecting the best policy with high claim ratio, keep these tips in mind:

Prefer insurers with CSR consistently above 98–99% over past 5 years.
Compare sum assured, premium, tenure, and riders across multiple providers under similar conditions.
If you have dependents (like spouse, children, parents), compute sum assured carefully — a recommended guideline: cover 10–15 times your annual income.
Always declare all health conditions truthfully and respond to medical tests properly — reduces risk of rejection.
Maintain regular premium payments (some plans offer grace period) to avoid lapse.
Consider riders if you want extra protection (e.g. critical illness, disability, accidental death) — they increase premium but give broader coverage.

🌟 Why Term Insurance Still Remains the Best “Protection-first” Solution

Term insurance remains one of the most affordable ways to get high life cover compared to saving or investment plans.
Because it’s pure risk cover (with no maturity benefit), premiums are lower — letting you allocate more funds elsewhere (investment, savings).
It combines high sum assured, tax benefits, flexibility, and optional riders — making it highly customizable based on personal needs.
With a reliable insurer (high CSR + good service history), your family gets assured financial protection, which matters most in uncertain times.

💡 Quick Pre‑Purchase Checklist (Before Buying a Term Insurance Plan)

✅ Checkpoint	❓ Why It Matters
Claim Settlement Ratio (5-year average)	Indicates reliability and claim payout history
Sum Assured & Policy Term	Ensures enough cover for dependents & future needs
Disclosure of Health & Lifestyle Facts	Avoids claim rejection later
Riders (Accident, CI, Waiver)	Adds extra protection layers
Premium Payment Frequency	Choose what fits your affordability (monthly/annual)
Grace Period & Lapse Conditions	To avoid policy lapse from delayed payments
Online vs Offline Purchase	Online tends to be cheaper & easier
Persistency Ratio & Customer Reviews	Show insurer’s quality and customer support record

What to Check Beyond Just Claim Settlement Ratio (CSR)

When evaluating a “good” term insurance plan, CSR is important — but it’s not the only metric you should base your decision on. Here are other factors to cross‑check for a truly reliable insurer and plan.

Solvency Ratio / Financial Strength of the Insurer

Insurance providers must maintain a minimum solvency ratio (i.e. buffer to pay future claims).
A strong solvency ratio gives confidence that the insurer can honour claims even if there’s a spike in claims or financial stress.

Persistency Ratio (How Many Policyholders Renew)

Persistency ratio shows how many customers renew their policies after year 1, year 5, etc.
High persistency often implies that customers are satisfied, claims processing is smooth, and service quality is decent — which are good signals for long-term reliability.

Amount Settlement Ratio (ASR)

While CSR shows how many claims are settled, ASR shows how much of the claimed amount was actually paid — i.e. full or partial payouts.
A high CSR but low ASR could mean many claims get settled, but with large deductions or partial payouts — important to verify.

Claim Processing Speed & Ease

Look for how quickly claims are processed (time from intimation to settlement), and whether insurers offer digital or smooth claim processing.
Good customer support and transparency in claim procedure reduce stress for nominee/family during tough times.

🛡️ Additional Features & Riders to Consider (Beyond Basic Death Cover)

A plain term plan covers only death benefit. But depending on your lifestyle, liabilities, and family needs — several riders or add-ons can add significant value. Look for:

Critical Illness Rider — provides a lump sum on diagnosis of serious diseases (e.g. cancer, heart attack).
Accidental Death / Disability Rider — extra payout if death or disability due to accident.
Waiver of Premium Rider — if policyholder becomes permanently disabled or critically ill, future premiums get waived but coverage continues.
Decreasing / Increasing Sum Assured Options — based on changing needs: e.g. decreasing sum would suit covering home loan; increasing sum assures inflation adjustment.
Flexible Premium Payment Modes & Payout Options — Some plans allow lump-sum payout, or part lump + regular income, or recurring payout, which can help families better manage money.

📌 How Premiums Are Determined & Tips to Get a Lower Premium

Your premium depends on multiple factors. Knowing them helps you get optimal cover at reasonable cost:

Age: Younger you are, lower the premium. Insurance gets costlier as age increases.
Health & Lifestyle: Good health, non‑smoker status, no chronic disease — result in lower premiums; pre-existing conditions or unhealthy habits increase premium.
Sum Assured & Policy Term: Higher cover or longer term → higher premium.
Occupation / Risk Exposure: High-risk jobs or risky lifestyle may lead to higher premiums or exclusions.
Payment Frequency & Mode: Some insurers allow annual payment (cheaper) vs monthly; choosing annually or full-term payment may reduce overall premium.
Riders & Add‑Ons: Each added rider increases your premium — choose only what you genuinely need.

Tip: Buying early in life and opting for a cover equal to 10–15× your annual income helps balance protection and affordability.

🧮 Estimating How Much Cover You Really Need (Coverage Calculators & Method)

A popular rule-of-thumb:
Sum Assured = 10–15 × your annual income + outstanding debts + future liabilities (education, mortgage, inflation buffer).

Also consider:

Age of children (how long before they become independent)
Outstanding loans (home loan, personal loan)
Expected inflation / future expenses
Potential spouse income loss

This ensures the insurance truly protects your family’s future, not just is a nominal cover.

🔄 When & Why You Should Buy Term Insurance Early

Buying younger gives lowest premiums — as health & risk are minimal at a young age.
As you grow older, responsibilities often increase (house loan, kids’ education, dependents) — so early purchase gives long‑term peace of mind.
Early planning ensures family is covered during peak earning years when financial obligations are high.

⚠️ Common Mistakes People Make When Choosing Term Insurance

Even experienced buyers sometimes go wrong — watch out for these pitfalls:

Choosing plan by lowest premium alone — often leads to under-insurance or skipped riders.
Ignoring solvency/persistency along with CSR — may cause trouble if company is financially weak.
Over-insuring or under-insuring — not estimating real financial needs properly.
Ignoring fine print, exclusions, or waiting periods — especially for riders.
Delaying purchase — premiums rise with age and health risks, waiting can cost more.

🧑‍💼 How to Evaluate & Compare Insurers (Checklist Before Buying)

✅ What to Check	📄 Why It Matters
Multiyear CSR + Amount Settlement Ratio (ASR)	To ensure insurer consistently pays correctly & fully
Solvency Ratio / Financial Stability	Guarantees ability to pay large future claims
Persistency Ratio	Reflects customer trust & insurer’s service quality
Available Riders/Add-ons	Allows extra protection (accident, disability, critical illness)
Premium Affordability & Payment Modes	Ensures you can sustain premiums for entire term
Flexibility in Payout Option (lump sum / regular payout)	Helps in better financial planning for dependents
Clear Policy Terms & Exclusions	Avoid surprises at claim time
Good Customer Support & Claim Process	For easier and fast claim settlement when needed

🌐 Macro‑Factors & Why Term Insurance Remains Critical in India

In India, social security or pension support for many is minimal; term insurance acts as a backbone for family’s financial security in absence of primary earner.
Rising inflation and uncertain job markets make long-term protection important; term cover ensures dependents’ lifestyle and future goals remain secure.
Term insurance gives high sum assured at low premium, compared to endowment or savings‑cum‑insurance plans.
Flexibility — many modern term plans allow you to choose riders, payout modes, adjust coverage over time — offering personalized protection.

More Metrics & Indicators to Evaluate When Choosing a Term Insurance Plan

1. Insurance Regulatory and Development Authority of India (IRDAI)‑mandated Minimum Solvency — Why It Matters

Insurers must maintain a minimum solvency ratio of 1.5 to ensure they have enough buffer to pay claims over time.
A higher solvency ratio (e.g. 1.8–2 or more) indicates better financial health and greater ability to honour claims even under stress (e.g. multiple claims at once).
When choosing a term insurer, check both — the recent CSR and whether their solvency ratio is comfortable above regulatory minimums.

2. Persistency Ratio — Indicator of Customer Trust and Service Quality

Persistency ratio shows how many policyholders continue renewing their policy (after 13 months, 37 months, 61 months, etc.).
A high persistency ratio suggests that existing customers trust the insurer — indicating good customer service, fair premium structure, and transparency.
When comparing insurers, a stable persistency record over years adds confidence beyond just a high CSR for a single year.

3. Amount Settlement Ratio (ASR) — Beyond Just Number of Claims Paid

There’s a difference between “percentage of claims settled by number” vs “percentage of total claim value settled.” An insurer might settle many small claims but under-pay or reject large claims.
Good practice: Look for insurers whose ASR is high (meaning they pay proper amounts even for large claims), not just CSR by number.

4. Historical Consistency — Look at Multi-Year Data Not Just Latest Year

A single-year high CSR may not reflect long‑term reliability. Insurers should demonstrate consistent performance over several years.
Check IRDAI disclosures or publicly available annual reports to review past 3‑5 years of CSR, solvency ratio, claim statistics. This gives better confidence in insurer’s stability.

✅ What to Check in Policy Documents & During Application — Best Practices

Even if insurer metrics look good, certain personal steps determine whether your claim will succeed when needed:

Full and accurate disclosure of health history and lifestyle: Any non-disclosure (e.g. pre-existing disease, smoking, risky hobbies) can result in claim rejection even with high CSR.
Careful filling of proposal form: Avoid mistakes or misstatements. Mistakes in name, age, income, or health can lead to disputes or rejection.
Understand exclusions & waiting periods: Many term plans exclude suicide for first 12 months, risky activities, or have special clauses — ensure you read fine print carefully.
Choose suitable riders only if needed: Riders like accidental death benefit, disability cover, critical illness, etc. add protection — but also increase premium. Check if you actually need them.

🎯 Additional Considerations for Long-Term Planning & Smart Coverage

Balance Between Premium and Coverage — Don’t Under-Insure

A good guideline: Sum Assured should be roughly 10–15× your annual income, plus liabilities (home loan, loans) and future needs (children’s education, retirement planning).
Very low premium might be tempting — but may also mean low sum assured or too many exclusions. Always match coverage to long-term financial needs, not just present affordability.

Prefer Online / Simplified Term Plans When Possible

Pure online term plans often have lower premium (no agent commissions, lower overhead) and faster issue processes.
They also tend to have simpler claim processes — which reduces hassle for your family when claim arises.

Re-evaluate Cover as Life Changes — Rebalance Sum Assured or Add Riders

Major life changes — marriage, kids, loans, career growth — should trigger a review of your coverage. If initial sum assured was based on past income, it may be insufficient over time.
If you get riskier lifestyle (e.g. a job with risk, or you take high-liability loan), consider additional riders or increased coverage.

🔎 Common Mistakes to Avoid & Myths About Term Insurance

❌ Mistake / Myth	✅ Why It’s Risky / What’s the Truth
Relying only on high CSR from last year	Doesn’t guarantee future consistency or large‑claim settlement — check multi‑year data and ASR.
Picking lowest premium only	May lead to under‑insurance or policy with poor terms/exclusions.
Not disclosing medical history / habits	Even a top insurer can reject claim due to non-disclosure or misstatements.
Ignoring solvency / financial strength	If insurer becomes financially weak, claim payout could be delayed or problematic.
Buying a policy and forgetting — never reviewing	Life changes — income, dependents — mean coverage needs change too.

🧮 Sample Checklist Before Signing a Term Insurance Policy

Claim Settlement Ratio — multi‑year average, ideally ≥ 95–97%
Solvency Ratio — preferably well above IRDAI minimum (1.5+), ideally 1.8–2 or more
Persistency Ratio — good renewal record (13th, 37th, 61st month)
Amount Settlement Ratio / payout history for large claims — shows how insurer handles big payouts, not just small ones
Transparent policy documents — clear exclusions, riders, waiting periods
Your correct, honest medical & personal information in proposal form
Appropriate sum assured based on income, liabilities, dependents & future obligations
Regular premium payment and policy review over time

Frequently Asked Questions (FAQs)

1. What is a claim settlement ratio (CSR) in term insurance?

The Claim Settlement Ratio (CSR) is the percentage of claims an insurer settles out of the total claims received in a financial year. A high CSR indicates that the insurer is more likely to pay claims efficiently.

2. Why is a high CSR important when choosing a term insurance plan?

A high CSR ensures reliability and builds trust that your family will receive the insurance payout when needed. It reflects the insurer’s efficiency in processing and settling claims.

3. Is CSR the only factor to consider while buying term insurance?

No. Besides CSR, check the solvency ratio, persistency ratio, amount settlement ratio, policy exclusions, riders, premium affordability, and claim process efficiency.

4. Can a claim be rejected even if the insurer has a high CSR?

Yes. Claims can be denied due to non-disclosure of medical history, incorrect information in the proposal, suicide within the waiting period, or claims arising from hazardous activities.

5. What is the ideal sum assured for term insurance?

Financial experts recommend a sum assured of 10–15 times your annual income, plus any outstanding loans or future obligations like children’s education and retirement planning.

6. Are online term insurance plans better than offline plans?

Online plans often offer lower premiums, faster policy issuance, and easier claim processes. However, ensure the plan meets your coverage needs and offers proper support in case of claims.

7. Do I need riders with a high claim ratio term plan?

Riders like critical illness, accidental death, or waiver of premium add extra protection but increase premium. Choose riders based on your lifestyle, liabilities, and family needs.

8. When is the best time to buy term insurance?

The earlier you buy, the lower the premium. Young, healthy individuals can secure higher coverage at affordable rates.

9. How often should I review my term insurance policy?

Review your policy every 2–3 years or after major life changes (marriage, children, loans) to ensure coverage still matches your financial obligations.

10. Does a high CSR guarantee full claim payout?

Not necessarily. CSR reflects the number of claims settled, but the amount settlement ratio (ASR) shows whether full payouts are given. Always consider both metrics.

Conclusion

Choosing the best term insurance plan with a high claim ratio is crucial for ensuring your family’s financial security. While a high CSR is a key indicator of reliability, it should be evaluated alongside other factors like solvency ratio, persistency ratio, claim process efficiency, and policy features.

A well-chosen term insurance plan provides:

Financial protection for dependents in case of unforeseen events
Affordable premiums with high coverage
Optional riders for additional protection like critical illness or accidental death
Peace of mind knowing your family’s future is secure

Tips for choosing the right plan:

Compare multiple insurers using CSR, solvency, and persistency data.
Calculate an adequate sum assured based on income, liabilities, and future expenses.
Disclose all health and lifestyle information accurately.
Consider relevant riders only if needed.
Review and update your policy periodically.

By carefully evaluating these factors, you can select a term insurance plan that not only has a high claim settlement ratio but also meets your family’s long-term financial needs, ensuring maximum security and peace of mind.